Reverse Mortgages: How Do They Work?

Reverse Mortgages are exploding in popularity and as more and more baby boomers reach age 62 and beyond they will become eligible to cash in on their home equity with a reverse mortgage.

A reverse mortgage is a home loan you don't have to pay back for as long as you live in your home. It can be paid to you in one lump sum, as a regular monthly income, or at the times and in the amounts you prefer. The loan and interest are repaid only when you sell your home, permanently move away, or die.

Because you make no monthly payments, the amount you owe grows larger over time. By law, you can never owe more than your home's value at the time the loan is repaid. You continue to own the home, so you must pay the property taxes, insurance, and repairs. If you fail to pay these, the lender can use the loan to make payments or require you to pay the loan in full.

The amount of funding you get from a reverse mortgage usually depends on your age, your home's value and location, and the cost of the loan. The greatest amounts typically go to the oldest owners living in the most expensive homes getting loans with the lowest costs. Most people get the most money from the Home Equity Conversion Mortgage (HELM), a federally insured program.

Loans offered by some state and local governments are generally for specific purposes, such as paying for home repairs or property taxes. These are the lowest cost reverse mortgages. Loans offered by some banks and mortgage companies can be used for any purpose.

If you have questions about Reverse Mortgages, and whether they might be right for you, post your question or comment using the "comment" link below and we'll get back to you with answers to your questions, or find a loan professional who can answer your questions for you.

Is Anywhere Totally Safe from Disasters?

This is a question worth answering no matter where you live. People in some parts of the country are highly susceptible to hurricanes, while others face virtually no risk from them. Some live with the risk of earthquakes, others do not.

Recent flooding that swamped parts of the Midwest, including Indiana, Wisconsin and Iowa, caught many property owners unprotected. Only 1 percent of all Indiana homeowners have flood insurance. Wisconsin reports even less than that. People generally pass on federally backed flood coverage because they don't realize it falls outside standard home insurance or they underestimate the risk.

Wisconsin Insurance Commissioner Sean Dilweg expects damages from flooding that passed through his state to top $100 million. But of the 2 million households statewide, only about 13,600 had flood insurance policies.

A lack of flood insurance isn't limited to the Midwest. The National Flood Insurance Program estimates that only half the property owners were insured when hurricanes Katrina and Rita tore up the Gulf Coast in 2005. The program paid $15 billion to those who did have coverage during what it deems the costliest storm season on record.

Being in the early stages of the 2008 Hurricane Season, and in the aftermath of the unusual flooding in the midwest, NOW might be a great time for EVERYONE to check their homeowner's coverage. After disaster strikes is too late.

Leave us any comment you might have about this subject by clicking on the "comment" link below. As always, your email address will never be published on this blog, even though you need it to post your comment. We'd love to hear from you.

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We'd love to hear your comments about whether you think the economy will improve in the second half of the year?

And we'd also like to know what, if anything, you are doing to weather the current economy… or have you not been affected at all?

Don't worry, your privacy is assured, as email addresses are NEVER published here. Just use the "comment" link below to tell us how you're fairing in this economy.  We'd love to hear from you.

New Home Sales Rise Unexpectedly

According to a new government report released recently, sales of new homes across the United States rose an unexpected 3.3 percent in April from the prior month, to a seasonally adjusted annual pace of 526,000 homes.

Although activity rose over the month, sales of new homes in the 12 months to April have dived a hefty 42 percent in the midst of a persistent housing market slump. Turnover of new homes has fallen steadily in the past two years, excepting some month-on-month gains, amid one of the worst US housing market downturns in decades.

The median sales price of new houses sold in April rose 9.1 percent compared with March to 246,100 dollars, marking the highest median price level since November of last year. The improvement in overall new home sales marked the highest level of sales since February, but sales have tumbled sharply from the market's red-hot days in late 2005 and early 2006 when over one million new homes on a seasonally adjusted basis were being bought each month.

A Commerce Department report also showed the average sales price of a new home in April was 321,000 dollars, marking a 10 percent gain from a month earlier.

Election 08: Which Candidate is Best for Real Estate?

Now that it APPEARS we have our two Presidential candidates, the question might be, "Which candidate is best for real estate?"

It's not clear what role the next president will have in shaping the government's response to the foreclosure crisis, because it's unclear what the housing situation will be and what Congress will have accomplished by Jan. 20, 2009. Each candidate, however, has expressed views on what lawmakers and lenders should do.

Although initially opposed to additional government aid in the mortgage mess, John McCain has joined Barack Obama in supporting the idea of the Federal Housing Administration backing loans that lenders have written down to affordable levels for borrowers. But the plans they support differ somewhat.

Obama backs a proposal that would require borrowers to share equity with the FHA when they sell or refinance their home. McCain has proposed the "HOME Plan," which blends elements of the plan Obama supports with proposals from the Bush administration and the Office of Thrift Supervision. Under McCain's proposal, if a borrower sells his home with a gain, the lender and the federal government each would receive a portion of the equity.

Beyond more help from the FHA, Obama has called for a $10 billion foreclosure prevention fund to help victims of mortgage fraud sell their homes or modify their loans so they can avoid foreclosure and bankruptcy.

McCain has called for the creation of a Department of Justice task force to investigate mortgage crimes involving lending and securitizing home loans.

As we get closer and closer to November, we will try to keep you informed here as to which candidate is promising what when it comes to the real estate industry.

Do you have an opinion (at this stage of the campaign) as to which of the two presumptive candidates might be best for the long term recovery of the real estate industry? Leave us your comment or opinion by clicking the "comment" link below.